Modi govt planning to crack down on tax evaders under GST regime

Government suspects that many business-to-business (B2B) transactions are being kept off the books and payments done in cash to avoid paying GST.

The central government is planning to crack down on tax evaders under the Goods and Services Tax (GST) regime, suspecting massive evasion. The government believes that the new e-way bill system and the transaction trail will help them identify the evaders, reported Mint.

States are scheduled to implement the e-way bill system for inter-state movement of goods from February 1, however, taxpayers have to file the GSTR-1 form for the initial few months by January 10, according to a government order.

The form (GSTR-1) requires the supplier of goods to specify details of the supply as well as that of the recipient.

"Once GSTR-1s are filed on a regular basis, some enforcement measures could be adopted. That includes field officers checking whether the recipients of supplies identified in these returns have also filed returns and paid their due taxes," an official aware of the development told Mint.

Small businesses with revenue not more than Rs 1.5 crore can file the first quarterly GST return (for July-September) by January 10, while companies with turnover above Rs 1.5 crore have to file monthly returns relating to supplies for the July-November period by January 10, according to the revised filing schedule.

GST collections continue to slide and in November, it fell to the lowest to Rs 80,808 crore, mostly due to the rate reduction of 178 items and the use of the integrated GST (IGST) as credit for paying taxes.

Government suspects that many business-to-business (B2B) transactions are being kept off the books and payments done in cash to avoid paying GST. It further suspects under-invoicing of goods.

"The government is talking about an increase in revenues with the implementation of the e-way bill system. Earlier, only a check post was a nuisance. But under the e-way system, vehicles can be stopped anywhere. It will definitely not be seamless movement of goods," said Suresh Nandlal Rohira, partner at Grant Thornton India told Mint.